Abstract
While New New Trade Theory emphasizes that firm productivity is an important determinant of firms’ participation in the export market, some literature had found that firms’ exporting behavior is also influenced by their ability to acquire external funds. In my research, I use “Credit Risk Premium” as the measurement of credit constraints and examine whether it affects the Extensive and Intensive Margin of Trade significantly. The Extensive Margin of Trade is tested by the Linear Probability model, Pooled Probit model, Random-effect Probit model, and Dynamic GMM model. As for the Intensive Margin, the Heckman Correction model is used. The data are acquired from Taiwan Economic Journal (TEJ) database and all the publicly traded companies in the manufacturing industry are included. I find that (a) credit constraints have no significant influence on both Extensive and Intensive Margin; (b) firm productivity affects the Intensive Margin significantly, but plays no significant role on the Extensive Margin; (c) Liquidity has a significant impact on both Extensive and Intensive Margin of Trade. Furthermore, these results are not sensitive to different measurements of credit constraints.